OPINION: Hands up all those who remember the sheep retention scheme? Or maybe the John Clarke parody, the black singlet retention scheme?
Those were the days, the 1970s, in heavily subsidised, totally regulated Kiwiland, when we were the most heavily controlled economy outside the Soviet bloc.
The sheep retention scheme subsidised huge sheep flocks on the grounds that we should be able to sell the wool and mutton somewhere. But farmers, making the most of subsidies which provided new Range Rovers, retained every old ewe that could still stagger round a paddock.
When these were finally dispatched to the works even the Arabs, who like a good chew, refused to buy the product. Instead the aged sheepmeat was ground up and dumped at sea.
The wool from this great rort was similarly too highly priced. When a carpet manufacturer complained that the high prices he had to pay for local wool were keeping him out of the American market and sought permission to source his wool from abroad, Prime Minister Rob Muldoon denounced him as a smart alec. “And you are, too,” Muldoon counselled the reporter who had the temerity to raise the issue.
All this comes to mind because of the union-Left complaints that the Government should step in to save jobs, such as newsprint-makers about to be laid off in Norske-Skog's cutback in Kawerau, and Rio Tinto's cutback at its Bluff aluminium smelter.
The case for Government assistance at Kawerau cited the Australian Government's subsidy to the company to keep newsprint production going in Australia. But should Kiwi taxpayers step in to assist a huge company from a wealthy country (Norway) to maintain production of a commodity which is in greatly reduced worldwide demand.
The Australian Government also continues to subsidise, at increasing cost, local car assembly, although as their own economists pointed out after this year's debate over the cost of keeping the iconic Holden brand going, this is a wasteful distortion which New Zealand rationalised decades ago without any long-term effect on unemployment.
Probably the winner of the Muldoon award was the suggestion that the Government should purchase the Bluff aluminium smelter as it could then provide it with cheap electricity from the Manapouri power station and thereby make production economic.
In other words, the Government should get into the business of competing with the American giant Rio Tinto in the world aluminium market. That would have the prospect of even outshining the sheep retention scheme as a doolally adventure.
Concern about job losses and the high kiwi hitting exporters brought demands from Opposition politicians, the unions and some manufacturers that something - anything - had to be done to lower the kiwi.
This frustration is understandable as the latest bout of American quantitative easing sent the kiwi soaring to US83 cents, accompanied by some predictions that it could eventually reach parity as there is no end date for Washington's money printing.
Labour Party leader David Shearer, his finance spokesman, David Parker, and New Zealand First leader Winston Peters all joined the high dollar refrain, but with a singular lack of coherence on solutions apart from a demand to amend the Reserve Bank Act, as if that, somehow, would provide a magical solution.
Economic Development Minister Steven Joyce decried all this as “snake oil solutions”.
I'm getting to like this outspoken minister-for-everything, who does not pussyfoot about. Faced with the caterwauling over the sale of the Crafar farms to China a few months ago, Joyce allowed himself a touch of exasperation, declaring: “Without China we are buggered.”
It is one thing for America to indulge in quantitative easing, for the Japanese, the Germans, the Swiss and the Chinese to unleash billions to influence their currencies, but puny New Zealand does not have this kind of grunt. Farting into the wind is a phrase that springs to mind.
Ironically, last weekend was the 20th anniversary of the Bank of England's dramatic failure to prop up the pound against billionaire speculator George Soros.
There's a message in that for the snake-oil brigade.
- © Fairfax NZ News